Why do we have corporate daycare?

Who should raise our children?

BusinessGovernmentFamilies

…one can best analyze modern society by thinking of it as an uneasy amalgam of three distinct realms: the social structure (principally the techno-economic order), the polity, and the culture.

Daniel Bell

Government

BusinessCulture

Government

BusinessCulture

Social Contract

Social Contract: Underlying agreement between business and society [the institutions of society] on the basic duties and responsibilities business [each of the institutions] must carry out… reflected in laws and regulations [and tacit understandings] p.9.

Government

BusinessCulture

1776 1876 1930 1976

Economy Agriculture

Local Markets

Transportation

Commun-ications

Industrial

National Markets

Robber Barons

Depression Post-Industrial

Global Markets

Corporations

Govern-ment

State Power

Laissez faire

Federal Power

Antitrust

ICC FTC

New Deal:

ICC, NLRB, FDIC,SEC

Social Regulation:

EPA, EEOC, CPSC, OSHA…

Culture Rural

Agrarian

WASP

Slavery

Immigration

Urbanization

Segregation

Changing Workforce

Mobility Feminism

Civil Rights

Diversity

Government

BusinessCulture

[We] have embraced a half-truth as the basis of our dominant social philosophy and public policy.

The half that is true is that at the root of our deteriorating state lies excessive governmental intervention in private lives.

The half that is amiss is the assumption that merely slashing the government will restore America’s economic, social, political, and ethical vigor.

Amitai Etzioni

Merely cutting back government will not set America on a course of

recovery unless these efforts are coupled with a period of

reconstruction of community—of family, schools, neighborhoods,

and nation– and above all individual renewal.

Amitai Etzioni

Historical Waves of Government Regulation of Business

C9-S2Figure 9-1

WW

I

Civ

il W

ar

Vo

lum

e an

d In

ten

sity

of

Go

vern

men

t R

egu

lati

on

s

WW

II

Ko

rean

War

Wave 2

Wave 1

Wave 3

Wave 4

1790 1837 1861- 1917- 1933 1942- 1950 1960 1980 19901865 1919 1945 1953

Historical Patterns of Federal Regulation of Business

First wave – Few regulations (Laissez Faire) some promotional for business.

Second wave – The era of regulation was dominated by public demands for government to regulate big business, and the Supreme Court gave the federal government new power to act. Antitrust Regulation

Third wave – The burst of activity in this wave was the result of many New Deal laws designed to deal with the ravages of the Great Depression of the 1930s.

Fourth wave – Intent to improve the quality of life resulted in new controls that deeply involved government. Social Regulation

McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.10-12

Government regulation of the private sector is justified under two circumstances: Economic: When flaws appear in the

marketplace that product undesirable consequences.

Social: When adequate social, political, and other reasons for government regulations exist.

10-4

Reasons For Regulation1. Economic -- Focus is market

efficiency and control Market Failure (Assumptions not

met). Natural Monopoly

Where because of natural conditions, a single firm can supply the entire market more efficiently than several competing firms.

Weigh economic benefits versus economic costs

Reasons For Regulation

2. Achieve Social/Political Goals Non economic values in the public

interest Socially desirable goods and services Protecting individual rights and privacy Resolution of national and global problems Regulation to benefit special groups Conservation of resources

Social value versus economic cost

Benefits of Government Regulation

Regulation has helped to: Improve the position of minorities Clean the environment Prevent monopoly Reinforce free competition Prevent corruption Strengthen the banking system Reduce industrial accidents Provide resources for the elderly Control communicable diseases

These benefits are enormous and incalculable

10-16

Costs of Regulation

1. Administrative Costs: $37.8 billion in 2007Costs of regulating (agencies, enforcement,...)Paid by Taxpayers

2. Compliance Costs: $1.1 trillion 11% of GDPCosts to companies to meet regulationsPaid by customers/shareholders

3. Indirect Costs: total costs unknownNon monetary costs (employment,

productivity, innovation,…)Paid by society in general

Administrative Costs of Regulation

10-15

Administrative Costs of Regulation

McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.10-19